Exclusive: Gokada pivots to an “asset-light model” as it looks to raise funding

Gokada, one of Nigeria’s most prominent last-mile delivery companies, has pivoted to an asset-light model amid efforts to raise funding, two sources close to the company told TechCabal. Oluwaseun Omotosho, the company’s COO, also confirmed the strategic shift–which kicked off in 2022–to TechCabal.

Going asset-light means that Gokada owns only 10% of the estimated 5,000 bikes on its platform. Drivers are onboarded as partners and are charged a commission for every order they fulfill.

Founded in 2017, Gokada initially began with a hire-purchase agreement for drivers. The arrangement involved the company buying the motorcycles and charging a daily repayment fee spread for up to three years. The plan was to convert these drivers into partners upon completing their payments. But this approach proved costly.

Since Gokada owned the bikes, it took on expensive maintenance costs that ran into tens of thousands of dollars monthly between late 2021 and early 2022.

“We thought to ourselves, what can we do to stop this? If we had continued, the business would have closed down,” Omotosho said. The company reworked the hire-purchase agreement and passed the maintenance cost to drivers. These decisions helped Gokada grow its revenue in 2022, the company said.

Gokada will no longer buy motorcycles for drivers and will instead connect drivers who need motorcycles to financing companies. It will only manage the motorcycles and oversee payment collection.

The company is also in talks with investors to raise funding this year, Omotosho said, declining to provide additional details.

In 2022, Gokada was looking to sell a competitor, Kwik Logistics, but the deal did not go through. In February 2023, TechCabal reported the company was looking to raise $100,000 through crowdfunding. The company raised $5.3 million in Series A funding in 2019.

Gone through the ‘worst phase’

2020 was a difficult year for Gokada. A ban on two-wheelers in Lagos forced the company to pivot from ride-hailing services to the delivery business. It also laid off 80% of its workforce. Fahim Saleh, the company’s former CEO, was also murdered in his New York apartment in the same year.

In February 2023, Gokada laid off at least 54 employees, citing harsh macroeconomic conditions. It also had to become a leaner operation, reducing its two offices into one and renegotiating terms with some of its vendors. The COO said no employee has been let go since the last layoffs and the staff count is now around 30.

“We have gone through the worst phase. We are not above the water yet. This survival period has allowed see what needs to be supported and what isn’t necessary,” he said.